The Chancellor of Exchequer has announced Budget for 2025/2026 the following is an extract from the Budget about tax rates and allowances.
| PERSONAL TAX AND BENEFITS |
| Income tax bands of taxable income (£ per year) |
| Tax year 2025-26 | Tax year 2024-25 | |
| Basic rate 20% | £1 – £37,700 | £1 – £37,700 |
| Higher rate 40% | £37,701 – £125,140 | £37,701 – £125,140 |
| Additional rate 45% | Over £125,140 | Over £125,140 |
| Income taxe rates | ||
| Main rates | Tax year 2025-26 | Tax year 2024-25 |
| Basic rate | 20% | 20% |
| Higher rate | 40% | 40% |
| Additional rate | 45% | 45% |
| Saving rates – 2 | ||
| Starting rate for savings up to £5,000 but it will reduce to zero if over £17,570 (£12,570+£5,000) | 0% | 0% |
| Savings basic rate | 20% | 20% |
| Savings higher rate | 40% | 40% |
| Savings additional rate | 45% | 45% |
1 Apply to non-dividend income, including income from savings, employment, property or pension.
2 Apply to saving income.
| Dividend rates | ||
| Tax year Tax year 2025-26 2024-25 | ||
| Dividend Allowance | £500 £1,000 | |
| Dividend ordinary rate for dividends otherwise taxable at basic rate | 8.75% 8.75% | |
| Dividend upper rate – for dividends otherwise taxable at the higher rate | 33.75% 33.75% | |
| Dividend additional rate – for dividends otherwise taxable at additional rate | 39.35% 39.35% |
| Income tax allowances |
| Tax year 2025-26 | Tax year 2024-25 | |
| Personal allowance | ||
| Personal allowance | £12,570 | £12,570 |
| Income limit for Personal allowance | £100,000 | £100,000 |
| Marriage allowance | ||
| Income limit for Married couple’s allowance | £37,700 | £37,700 |
| Marriage allowance | £1,260 | £1,260 |
| Married couple’s allowance for those born before 6 April 1935 |
| Maximum amnount of married couple’s allowance | £11,270 | £11,080 |
| Minimum amount of married couple’s allowance | £4,360 | £4,280 |
| Blind person’s allowance | ||
| Blind person’s allowance | £3,130 | £3,070 |
| Dividend allowance | ||
| Dividend allowance | £500 | £500 |
| Personal savings allowance for basic rate taxpayers | £1,000 | £1,000 |
| Personal savings allowance for higher rate taxpayers | £500 | £500 |
| For full details of rates and allowance please visit HMRC website https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/annex-a-rates-and-allowances |
